Govt’s euro bond issue gets investment grade
Credit to Author: Mayvelin U. Caraballo, TMT| Date: Mon, 20 Jan 2020 16:18:43 +0000
International credit rating agencies have assigned investment grade scores on the government’s planned 500-million euro ($554-million) bond issuance.
In a statement, S&P Global Ratings said it “assigned its ‘BBB+’ long-term foreign currency issue rating to the proposed benchmark-size euro-denominated senior unsecured notes to be issued by the Republic of the Philippines (BBB+/Stable/A-2).”
Fitch Ratings, in a separate statement, also announced it has assigned the Philippines’ forthcoming euro-denominated bonds an expected rating of ‘BBB (EXP)’.
“The expected rating is in line with the Philippines’ Long-Term Foreign-Currency Issuer Default Rating (IDR) of ‘BBB’ with a stable outlook,” it added.
Also on Monday, the Bureau of the Treasury said it is currently conducting investors call for the planned issuance.
“We started the investor calls for today [because] we still have to see the market conditions. But we have already done the indication in terms of tenor both for three years and nine years,” National Treasurer Rosalia de Leon told reporters in an interview.
She added that the Treasury bureau also appointed four banks to sell the euro bond, which includes UBS, Citi, Standard Chartered Bank, and Credit Suisse.
In May last year, strong investor demand enabled the government to raise $842 million from its euro bond issuance.
The amount generated — 750 million euros when converted — was an upsize of the initial 500-million-euro benchmark offering.
The eight-year euro bond fetched a coupon rate of 0.875 percent.
The Treasury bureau said the transaction allowed the government to diversify its funding program to support productive spending for infrastructure and social services.
By geographical allocation, 24 percent of the bonds were allocated to Germany, 15 percent to Italy, 10 percent to the United Kingdom, 26 percent to the rest of Europe, 9 percent to the United States, 6 percent to the Philippines, 5 percent to the rest of Asia, and another 5 percent to other countries.
In terms of investor type, 59 percent went to fund managers; 24 percent, banks and corporates; 11 percent, insurance, pension funds and official institutions; and the rest to other investors.
Deutsche Bank and UBS were the transaction’s joint global coordinators, while BNP Paribas, Credit Suisse and Standard Chartered Bank were the joint bookrunners.